Interest-Only Loan Calculator
An interest-only loan and the payment jump when principal starts. The balance does not fall by a rupee during the interest-only period, which is the whole risk.
Also called: io loan calculator.
$35,416.67 a month while interest only, then $49,236.98 once principal starts, a jump of $13,820.31. The principal is unchanged at the switch.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
During the interest-only period the payment covers interest exactly, so the principal is identical at the end of it. The amortising payment then has to clear the full principal over a shorter remaining term, which makes the jump larger than people expect.
interest-only payment is just the interest; the later payment amortises the full principal over what remains- P
- Principal (currency)
- m
- Months after the interest-only period (months)
Method and limits
What it assumes
- A fixed rate throughout.
What it deliberately does not model
- Rate resets at the switch are common and would make the jump larger still.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Why is the jump so large?
- Because the same principal now has to be repaid over a shorter period. Five years of interest-only on a twenty-year loan leaves fifteen years to clear what twenty would have cleared.